Recession Buster: Open Source's Moment

By Bob Violino |
Posted 01-27-2009

Recession Buster: Open Source's Moment

With a tough economy forcing organizations to look for ways to cut costs--and with many open source projects reaching a maturity level that IT executives are comfortable with--the technology might be on the verge of making serious inroads into corporate IT environments

Not that long ago, open source software was regarded by many technology leaders as something to be used in a limited, even experimental way. Even today, some CIOs are skeptical about open source as a viable option for enterprise applications or to support critical business functions.

But interest in open source software is high, according to industry research. A report released by Stamford, Conn., research firm Gartner Inc. in November 2008 shows that the adoption of open source software is becoming pervasive. Of the 274 worldwide companies surveyed by Gartner, 85% said they were currently using open source in their enterprises and the remaining 15% said they expect to use it in the next 12 months. Only one-third of the 1,017 technology and business professionals surveyed by Forrester Research Inc., Cambridge, Mass., in December 2007 expressed no interest in open source products.

The sluggish economy might be helping to fuel growth. "Open source vendors are consistently reporting that deals and potential deals--sometimes large ones--that they thought were lost are coming back," says Jay Lyman, an analyst at The 451 Group, an IT research firm in New York. "We think this highlights the increased interest in and use of open source software as a cost-savings measure."

At the same time, Lyman says, open source software has matured and improved in quality, "so this bodes well for open source in general during these difficult economic times." He thinks open source has arrived as an enterprise IT strategy. Martin Ross, vice president of technology at Healthscreen Solutions Inc., a Toronto-based medical records, billing and patient scheduling software and services company, agrees.

"We are living proof, since it is infused throughout all areas of our organization," Ross says. Healthscreen uses open source software in areas including customer resource management (CRM), business intelligence, reporting, desktop and server operating systems, an in-house services platform, and even for its external software product, HSPractice.

Multiple Benefits Drive Adoption

Ross says the biggest drivers for using open source are cost savings, licensing flexibility, development flexibility (toolkits can be customized), and the fact that many open source projects actually have better and larger support communities than proprietary products.

Healthscreen has seen benefits from its open source strategy. For example, using SugarCRM, an open source CRM product, to track sales to doctor clients, forecast future sales and manage operational and sales workflows, has helped the company grow significantly in recent years. The reporting module and dashboard included with SugarCRM give Healthscreen critical business metrics that would be difficult to collect manually.

How can the company be sure that open source solutions deliver the same level of reliability it would get with commercial offerings? By piloting the software before putting it into production--the same as with commercial software, Ross says. Both open source and commercial software come with risks, he says.

"In the commercial world you risk the supplier going bankrupt or discontinuing the product," Ross says. "In the open source world you risk the community disappearing or losing interest."

Smaller open source projects tend to be more like commercial products in that there is really only one group that supports the software, he says. Larger projects are better than commercial offerings, "since you have multiple groups/entities that can provide support," Ross says.

Not all companies are implementing open source as broadly, but are seeing benefits in specific areas. Hersha Hospitality, Harrisburg, Pa., a real estate investment group that invests in hotels in business districts and suburban office markets mainly in the Northeastern U.S., several years ago replaced its aging time-division multiplexing (TDM) phone system with an open source voice over IP (VoIP) system called Asterisk from Digium Inc.

The older system provided limited calling capabilities, was running out of capacity and couldn't support Hersha's growing business, according to Jason Shane, director of IT. Shane says Hersha implemented VoIP because of the expected cost savings and added calling functions such as in-house teleconferencing. To save even more, the company elected to build the VoIP system internally using Digium's open source software, rather than buying a commercial VoIP system.

Hersha uses the Asterisk-based system as its voice telecom backbone, with VoIP servers handling direct-dial calling between various sites and providing voicemail, conferencing and other functions. "We found that the phone system was and continues to be a great win," Shane says.